Pentium ramp to fuel certain firms

Electronic News, Feb 14, 1994

NEW YORK--Intel's aggressive ramp of silicon-rich Pentium microprocessors may propel the nets of more companies than Instel, according to Mark Edelstone of Prudential Securities, who suggested that a number of DRAM, SRAM and systems logic chipset makers are in line to benefit from the onslaught.

DRAM maker Micron Technology should be a "significant beneficiary" of a rapid-fire spread of Pentium-based systems, Mr. Edelstone said, as will Texas Instruments, even though DRAMs only represent a relatively small percentage of its overall sales. Pentium-based PCs have been configured with a minimum 8MB of DRAMs versus 4MB in 486-based PCs, with an average, at the beginning, of at least 16MB likely, he said.

Fast SRAM suppliers Cypress Semiconductor and Integrated Device Technology have already begun to benefit with incremental orders in the December quarter, the Prudential report said, pointing out that Cypress's book-to-bill ratio of 1.14 in the December quarter was "well above" the industry average of 1.04.

The report said that while overall demand was broad-based, the initial bookings for Cypress's 3.3V 256K SRAMs slated for use in P54C-based Pentium systems were a key factor in the strong book-to-bill ratio. Integrated Device Technology was said to have "experienced a similar phenomenon," and both firms expect SRAM demand from Pentium-based systems to move to higher-priced 1M SRAMs toward the end of 1994. Micron and Motorola were mentioned as two other major U.S.-based fast SRAM suppliers that should gain from Intel's aggressive stance.

The Prudential report said Pentium-based systems are expected to use a minimum of 256KB of fast SRAMs, with many systems using 512K-1M or 12-15ns SRAMs, while 486-based PCs are typically configured with 128KB-256KB of fast SRAMs (20-25ns). While the initial Pentiums operate at 60-66MHz, it is expected the P54C versions will operate at 80 and 100MHz, the report continued. As clock speeds increases, so will the need for fast SRAMs. While initial Pentiums operate at 5V, the second generation Pentiums are set to operate at 3.3V, requiring specially designed 3.3V fast SRAMs.

Systems logic chipset makers VLSI Technology and Opti stand to gain from average selling prices (ASPs) two to five times higher than prices of 486-based systems logic chipsets, Mr. Edelstone said, adding that increasing ASPs should "drive a higher silicon content and a richer product mix" for the companies.

The report suggested the biggest winner in this area could very well be LSI Logic. "Intel is selling an ASIC that is supplied by LSI Logic, and as a result Intel will likely be one of LSI's largest customers this year," it said.

With its family of GaAs cache controllers that target the high-end of the Pentium-based PC and server market, Vitesse Semiconductor was named as another potential benefactor. Although Vitesse's PC-related sales are currently a small percent of total sales, they could grow rapidly, the report said, adding that Vitesse's circuits "have historically offered performance levels that were too high for the PC market."

Prudential has raised its 1994 production estimate for Pentium MPUs to nearly 6 million units from its previous estiamte of 3-4 million, with two-thirds of the units to be produced in the second half of the year. "As the year progresses, we would expect an increasing percentage of the mix to come from Intel's second-generation design, which operates at 3.3V," the report noted.

Estimating average silicon content in today's PCs of $1,500, the Prudential report went on to predict this will decline to $1,200 in all of 1994. "Despite the decline, however, Pentium-based PCs will likely contain roughly three times more silicon than prior-generation PCs. Even though Pentium-based PCs purchased in 1994 should represent less than 10 percent of the 45-50 million PCs we expect will ship this year, their higher silicon content should drive the average semiconductor content in PCs to about $470 per system," the Prudential report said.